How to use CFA flashcards properly

CFA flashcards work best when each card tests one decision, definition or calculation. They should not become a second set of notes. The exam tests application to a vignette, so a useful card asks what a formula means, when it applies and how its result changes an investment decision.

This deck is designed as a mixed CFA revision set. Check each card against the level and curriculum readings you are sitting: not every topic or formula appears at every level. The cards focus on recurring calculation habits, terminology and Ethics decisions rather than trying to represent the whole syllabus.

Work through the deck on the page. Read the question, answer it before revealing the answer, then grade the recall:

  • Again — you could not produce the answer or used the wrong formula.
  • Hard — you recalled the idea but needed prompting or made a small calculation error.
  • Good — you answered accurately without help.
  • Easy — you answered accurately and could explain the interpretation.

Use Again for a card you guessed. A familiar formula is not enough if you cannot identify its inputs, units and implication in a vignette.

Here is the deck in a form to study one card at a time. The first card is ready to answer; continue through the remaining cards, revealing each answer only after you have committed to one.

A CFA flashcard deck on valuation, portfolio management, derivatives and Ethics ends up looking like this:

Cards — CFA — Core calculations and professional judgement18 due

A two-year bond has modified duration of 4.2. If its yield rises by 0.50%, what is the approximate percentage price change?

−2.10%: approximate price change = −modified duration × change in yield = −4.2 × 0.005.

All 18 cards
A two-year bond has modified duration of 4.2. If its yield rises by 0.50%, what is the approximate percentage price change?−2.10%: approximate price change = −modified duration × change in yield = −4.2 × 0.005.
What is the decision rule for a conventional project using net present value?Accept the project if NPV is positive when discounted at the required return; reject it if NPV is negative. A zero NPV means it earns exactly the required return.
A stock has a risk-free rate of 3%, beta of 1.2 and expected market return of 8%. What expected return does CAPM give?9.0%: 3% + 1.2 × (8% − 3%) = 9%.
State the after-tax cost of debt used in WACC when the pre-tax cost of debt is rd and the tax rate is T.rd(1 − T), because interest is treated as tax-deductible in the standard WACC formulation.
What happens to the price of an option-free bond when its required yield rises, holding other features constant?Its price falls. The relationship is inverse; the percentage effect is larger for longer duration and generally moderated by positive convexity for a given yield movement.
What does a Sharpe ratio measure?Excess return per unit of total risk: (portfolio return − risk-free rate) divided by portfolio standard deviation.
Under the one-period binomial model, what is the risk-neutral probability when the gross risk-free return is 1 + r, the up factor is u and the down factor is d?p = (1 + r − d) / (u − d), assuming the model's stated inputs and no additional cash flows.
For European options on a non-dividend-paying asset, state put–call parity.C + present value of the exercise price = P + S0. Equivalently, C + PV(K) = P + S0.
What is the exact relationship between nominal return, real return and inflation?(1 + nominal return) = (1 + real return)(1 + inflation). The approximation nominal return ≈ real return + inflation is less precise.
In a DuPont decomposition, how is return on equity expressed using three components?ROE = net profit margin × total asset turnover × financial leverage, where leverage is average total assets divided by average shareholders' equity.
What is the main distinction between systematic and nonsystematic risk?Systematic risk is market-related and cannot be diversified away; nonsystematic risk is issuer- or asset-specific and can be reduced through diversification.
A portfolio earns 10% and its benchmark earns 7%. What is the portfolio's active return?3%, calculated as portfolio return minus benchmark return.
What does tracking error usually measure for an actively managed portfolio?The variability of active returns, commonly estimated as the standard deviation of portfolio returns minus benchmark returns.
A company reports net income of 120, depreciation of 20, after-tax interest expense of 8, capital expenditure of 50 and an increase in working capital investment of 10. Using the standard FCFF build-up, what is FCFF?88: 120 + 20 + 8 − 50 − 10 = 88.
What is the difference between a spot rate and a forward rate?A spot rate applies to a single cash flow from today to a specified future date; a forward rate applies to a borrowing or lending period that begins in the future.
What should a CFA candidate do on receiving material nonpublic information about an issuer?Do not trade or cause others to trade on it, and do not communicate it improperly. Follow the applicable law, firm procedures and CFA Standards requirements.
Why is interpreting a calculated result necessary after showing a formula?The result must answer the command in the vignette. For example, a positive NPV supports acceptance only under the stated assumptions and required return; formula substitution alone does not establish the recommendation.
When should an assumption be stated in a CFA calculation?When the vignette leaves a relevant point unspecified or the method depends on one. State the smallest defensible assumption, use it consistently and explain how it could affect the conclusion.
An illustrative 18-card CFA revision deck with one calculation, definition or application point per card.

That is a MySummaries deck, filled with CFA material. Yours is written from your own notes. Start free

After revealing each answer, say the result aloud in the language you would use in an item set or constructed response. For example: “The yield increase implies an approximate 2.10% price fall, before allowing for convexity.” That final clause shows interpretation rather than formula dumping.

The four passes through this deck

Pass one: retrieval

Answer every question without opening a textbook. Mark uncertainty honestly. A card belongs in Again if you remembered the formula but could not explain a term such as modified duration, active return or risk-neutral probability.

Do not spend five minutes repairing one card during the first pass. The purpose is to identify the gaps. Put a short mark beside cards involving signs, percentages or discounting: these are easy places to lose accuracy under time pressure.

Pass two: calculation discipline

Return to the cards that involve numbers. Write the units beside the inputs:

  • 0.50% is 0.005 when used as a decimal change in yield.
  • A percentage return and a percentage-point change are not interchangeable.
  • Check whether the formula uses a pre-tax or after-tax quantity.
  • Check whether the question asks for an approximate or exact relationship.

For bond duration, the negative sign is part of the interpretation: yields and prices move in opposite directions. For CAPM, calculate the market risk premium before multiplying by beta. For FCFF, keep financing and operating cash-flow adjustments consistent with the formula being used.

Pass three: vignette transfer

Flashcards are not a substitute for item sets. Once a card is secure, attach a condition to it. Ask what would change if the tax rate changed, if the bond had lower duration, if the portfolio return were below its benchmark, or if the information were public rather than material and nonpublic.

The aim is not to memorise every possible variation. It is to recognise the structure quickly, select the relevant facts and avoid importing facts that the vignette does not provide.

Pass four: spoken explanation

Give a 30-second explanation for the cards you marked Hard. Use this order:

  1. State the requested measure or decision.
  2. Give the formula or standard.
  3. Substitute the relevant facts with consistent units.
  4. Interpret the result.
  5. State a material limitation or assumption if one affects the conclusion.

This mirrors the habits needed when a question asks for a recommendation rather than an isolated number. It also exposes a common weakness: knowing that a project has positive NPV but failing to say whether the stated decision rule supports acceptance.

Cut the deck from the Must not miss core

The deck above should be cut from a smaller checklist. If you cannot answer an item in the core, keep its related cards in the daily queue. If you can answer it easily and apply it to a new fact pattern, reduce its frequency rather than deleting it entirely.

A core checklist for this deck looks like this:

A CFA calculation and judgement core contains the formulas and decisions that the cards were cut from:

Must not miss coreCFA — Core calculations and professional judgement
Duration: approximate percentage price change = −modified duration × change in yield; keep yield changes in decimal form and interpret the sign.
CAPM: expected return = risk-free rate + beta × market risk premium.
WACC: use the after-tax cost of debt where the standard tax shield assumption applies; keep weights and rates on a consistent basis.
Portfolio measures: Sharpe uses excess return divided by total risk; active return is portfolio return minus benchmark return; tracking error is the variability of active returns.
CFA judgement: apply the command word, use only relevant vignette facts, state minimal assumptions, interpret calculations and identify Ethics implications, including material nonpublic information.
An illustrative core checklist showing the source points behind the CFA flashcard deck.

Review the core before attempting a full question set. It should take only a few minutes. If the review takes half an hour, the core is exposing a genuine gap rather than wasting time.

Turn repeated errors into one-card repairs

A useful remediation card is narrower than the original card. Do not write “revise derivatives” after missing put–call parity. Write the exact confusion: which asset belongs on each side of the parity relationship, or whether the exercise price must be discounted.

Likewise, after an Ethics mistake, record the conduct and the reason. “Do not trade on material nonpublic information” is stronger when linked to the action the vignette describes: buying for a client, tipping a colleague or recommending a trade. The next review should test the boundary, not merely the definition.

After two failed recalls, the platform can place a short repair prompt in the remediation tray:

A repeated error on this deck produces a focused repair rather than another full chapter:

Remediation tray

You lost this card twice: a bond has modified duration 4.2 and its yield rises by 0.50%. Give the approximate price change, including the sign, and state what the sign means.

Add cardDismiss
An illustrative remediation prompt for a repeated CFA flashcard error.

Answer the repair immediately, then return to the original card. If you still miss it, add the missing distinction to the answer rather than making the card longer with unrelated theory.

How MySummaries helps

Build a revision board from your CFA notes, curriculum summaries and worked calculations, then generate cards from the sections you have actually studied. The board can keep formulas, definitions, Ethics rules and interpretation prompts together while repeated errors become targeted cards in the tray. Start at portal.mysummaries.app.